Weekly Market Insights

The Markets (as of market close March 24, 2023)

Investors were on edge for most of the week, with concerns about banking, rising interest rates, inflation, and volatile stock and bond markets. Treasury yields dipped to their lowest levels since September. Indicative of the bumpy week of trading, the Russell 2000 gained, then fell to its lowest level since October, then bounced back to end the week higher. By the end of last week, the Nasdaq and the S&P 500 advanced the furthest among the benchmark indexes listed here. Ten-year Treasury yields ended about where they began. The dollar advanced later in the week, but not enough to keep from closing lower. Crude oil prices remained below $70.00 per barrel, despite closing the week up more than 4.0%. Gold prices slipped minimally. 

Stocks closed last Monday higher to begin the week. Investors held the line with equities as they awaited the latest action from the Federal Reserve following the conclusion of its two-day meeting on Wednesday. All 11 S&P 500 market sectors ended the session up, with energy, financials, communication services, consumer discretionary, and materials leading the way. Among the benchmark indexes listed here, the Dow (1.2%) and the Russell 2000 (1.1%) rose the most, followed by the S&P 500 (0.9%), the Global Dow (0.8%), and the Nasdaq (0.4%). Ten-year Treasury yields gained 8.6 basis points to close at 3.48%. Crude oil prices fell earlier in the day but reversed course later to advance 1.2% to $67.55 per barrel. The dollar dipped lower, while gold prices rose 0.5%.

Wall Street saw another day of positive gains last Tuesday, with several of the benchmark indexes rising for the sixth out of the last seven sessions. The small caps of the Russell 2000 gained 1.9%, to lead the benchmark indexes listed here. The Nasdaq rose 1.6%, followed by the Global Dow (1.5%), the S&P 500 (1.3%), and the Dow (1.0%). The yield on 10-year Treasuries jumped 12.5 basis points to reach 3.60%. Crude oil prices climbed 2.8% to $69.50 per barrel. The dollar slipped marginally, while gold prices dropped 2.0%.

Last Wednesday saw stocks finish lower following a late-day sell-off. After the Federal Reserve hiked interest rates 25.0 basis points (see below), Fed Chair Jerome Powell suggested that a slowdown in rate hikes was not in the foreseeable future. The Russell 2000 gave back gains from the prior day, falling 2.8% by the end of trading. The Dow, the S&P 500, and the Nasdaq each fell by at least 1.6%. The Global Dow dipped 0.2%. Yields on 10-year Treasuries slid 10.6 basis points to end the day at 3.50%. Crude oil prices climbed back up over the $70.00 per barrel mark earlier in the day, only to close at about $69.91 per barrel. The dollar fell for the third consecutive session, while gold prices advanced 1.6%.

Equities ended higher last Thursday, following a volatile session. Despite big swings throughout the day, only the Russell 2000 (-0.4%) ended lower among the benchmark indexes listed here. The Nasdaq rose 1.0%, the S&P 500 advanced 0.3%, the Dow added 0.2%, and the Global Dow inched up 0.2%. Communication services and information technology were the only sectors closing higher, with energy and utilities falling more than 1.0%. Bond prices rose on increased demand, sending yields lower. Ten-year Treasury yields slid 9.4 basis points to close at 3.40%. Crude oil prices ended a short rally, down 2.3% to $69.24 per barrel. The dollar and gold prices climbed higher. 

Stocks closed higher last Friday to end a volatile week of trading. Among the indexes listed here, only the Global Dow lost value (-0.93%). The remaining indexes ended the session higher, led by the Russell 2000 (0.9%), followed by the S&P 500 (0.6%), the Dow (0.4%), and the Nasdaq (0.3%). Ten-year Treasury yields finished the day lower for the third straight session, slipping 2.6 basis points to 3.38%. The dollar advanced, while gold prices fell. Crude oil prices fell 1.0% to $69.20 per barrel.

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic News

• The Federal Open Market Committee increased the target range for the federal funds rate 25.0 basis points to 4.75%-5.00%, the highest range since 2007. The Committee noted that job gains picked up, while inflation remained elevated, and it left little question that it is committed to bringing inflation down to 2.0%. The FOMC specifically referenced the U.S. banking system, indicating that it is "sound and resilient," despite recent bank closures. However, the Committee predicted that "recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation." While anticipating additional policy firming to return inflation to 2.0% over time, the Committee indicated that it would continue to monitor labor market conditions, inflation pressures and inflation expectations, and financial and international developments, and "would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals."
• Sales of existing homes increased in February for the first time in the last 12 months. Existing-home sales rose 14.5% last month, the largest monthly percentage increase since July 2020. Despite the February increase, existing-home sales remained 22.6% below their year-earlier sum. Total housing inventory sat at a 2.6-month supply in February, down from January (2.9%) but up from 1.7 months in February 2022. The median existing-home price was $363,000 in February, up slightly from $361,200 in January but down from the February 2022 median price of $363,700. Sales of existing single-family homes jumped up 15.3% in February from the previous month but were 21.4% under the February 2022 price. Inventory of single-family homes was 2.5 months in February, down from 2.9 months in January and under the February 2022 pace of 2.7 months. The median price for existing single-family homes was $367,500 in February, up from the January price of $365,400 but lower than the February 2022 price of $370,000.
• According to the Census Bureau, sales of new single-family homes in February increased 1.1% above the January rate. Despite the increase last month, new home sales were 19.0% below the February 2022 estimate. Available inventory sat at an 8.2-month supply based on the current sales pace, 0.1 percentage point below the January pace. The median sales price was $438,200 ($426,500 in January), while the average sales price was $498,700 ($479,800 in January).
• New orders for manufactured durable goods, down three of the last four months, decreased 1.0% in February, according to the Census Bureau. This followed a 5.0% January decrease. Excluding transportation, new orders were virtually unchanged. Excluding defense, new orders decreased 0.5%. Transportation equipment, also down three of the last four months, drove the decrease after falling 2.8%. Shipments, down two consecutive months, fell 0.6% in February. Inventories increased 0.2% in February, increasing for the 24th out of the last 25 months.
• The national average retail price for regular gasoline was $3.422 per gallon on March 20, $0.034 per gallon less than the prior week's price, and $0.817 less than a year ago. Also, as of March 20, the East Coast price decreased $0.006 to $3.309 per gallon; the Gulf Coast price declined $0.065 to $3.022 per gallon; the Midwest price fell $0.048 to $3.262 per gallon; the Rocky Mountain price decreased $0.099 to $3.631 per gallon; and the West Coast price decreased $0.037 to $4.365 per gallon. Residential heating oil prices averaged $4.131 per gallon on March 20, $0.053 below the previous week's price, and $0.755 per gallon less than a year ago.
• For the week ended March 18, there were 191,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week's level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 11 was 1.2%, unchanged from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended March 11 was 1,694,000, an increase of 14,000 from the previous week's level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended March 4 were New Jersey (2.7%), Rhode Island (2.5%), Massachusetts (2.4%), California (2.3%), Minnesota (2.3%), Alaska (2.0%), Illinois (1.9%), Montana (1.9%), New York (1.9%), and Puerto Rico (1.9%). The largest increases in initial claims for unemployment insurance for the week ended March 11 were in Ohio (+2,401), Indiana (+700), Illinois (+613), Florida (+596), and Oklahoma (+472), while the largest decreases were in New York (-15,436), California (-2,812), Oregon (-1,133), Minnesota (-1,042 ), and Georgia (-962).

Eye on the Week Ahead

The third and final estimate of fourth-quarter gross domestic product is available this week. The second of three estimates, released last month, showed the economy accelerated at a rate of 2.7%. The February data on personal income and outlays is also out this week. January saw personal income increase 0.6%, consumer spending advance 1.8%, and consumer prices rise 0.6%.

The Markets (as of market close March 17, 2023)

Stocks closed mostly higher during a volatile week. The Nasdaq and the S&P 500 led the benchmark indexes listed here, while the Dow, the Russell 2000, and the Global Dow declined in value. Crude oil prices settled at the lowest level since December 2021. Gold prices vaulted up nearly 6.0%, while the dollar ticked lower. Financials took a hit last week as U.S. banks borrowed nearly $165 billion through the Federal Reserve on the heels of the failure of Silicon Valley Bank. On the other hand, the technology sector was clearly the beneficiary of an otherwise tumultuous week. In fact, the Nasdaq enjoyed its best week since November of 2022. 

Last week began with stocks generally sliding lower by the end of Monday's trading session. Among the benchmark indexes listed here, only the Nasdaq (0.5%) ended higher. The Russell 2000 (-1.6%), the Global Dow (-1.5%), the Dow (-0.3%), and the S&P 500 (-0.2%) closed lower. Bond prices surged, with yields tumbling. Ten-year Treasury yields lost 18.0 basis points to close at 3.51%. With two banks closing last weekend, bank stocks were hard hit on Monday. Investors moved to consumer staples, utilities, and health care sectors, which outperformed. Crude oil prices dropped 2.90%, settling at $74.46 per barrel. The dollar slid lower. Gold prices advanced over $50.00 to reach $1,917.60 per ounce. 

Stocks reversed course last Tuesday, surging higher following a stretch of poor returns. The Nasdaq led the benchmark indexes, climbing 2.1%, followed by the Russell 2000 (1.9%), the S&P 500 (1.7%), the Dow (1.1%), and the Global Dow (0.6%). Ten-year Treasury yields closed at 3.79%, up 12.3 basis points. Crude oil prices fell to $71.55 per barrel, the lowest price since December 2022. The dollar was little changed, while gold prices edged lower. Investors, hoping that the Federal Reserve will slow the pace of interest-rate hikes, were encouraged by the latest Consumer Price Index (see below), which was in line with expectations. 

Investors moved from risk last Wednesday as shares of a major financial institution tumbled to record lows, adding more pressure to the financial sector. Only the Nasdaq was able to eke out a gain of 0.1% by the close of trading. The remaining benchmark indexes listed here closed in the red, led by the Global Dow (-2.3%), followed by the Russell 2000 (-1.7%), the Dow (-0.9%), and the S&P 500 (-0.7%). Ten-year Treasury yields fell 14.6 basis points to 3.49%. Crude oil prices have come under pressure lately, declining more than 7.0% during the day, ultimately falling 4.3% to $68.27 per barrel. Gold prices (+0.6%) and the dollar (+1.1%) increased.

Stocks enjoyed a broad-based rally last Thursday as financials rebounded, following reports that two major banks were getting financial assistance. The Nasdaq gained 2.5% to lead the benchmark indexes listed here, followed by the S&P 500 (1.8%), the Russell 2000 (1.5%), the Dow (1.2%), and the Global Dow (0.9%). Ten-year Treasury yields rose 9.3 basis points, closing at 3.58% as bond prices slid lower. Crude oil prices climbed $0.65 to $68.26 per barrel. Both the dollar and gold prices declined. 

Last Friday saw stocks tumble lower as Wall Street was unable to extend the previous day's gains. The Russell 2000 fell 2.6%, followed by the Dow (-1.2%), the S&P 500 (-1.1%), the Global Dow (-0.8%), and the Nasdaq (-0.7%). Ten-year Treasury yields lost 19.0 basis points, ending the day at 3.39%. Crude oil prices dropped to $66.29 per barrel. The dollar dipped lower, while gold prices advanced.

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week's Economic News

• The Consumer Price Index rose 0.4% in February after increasing 0.5% in January. Over the 12 months ended in February, the CPI has risen 6.0%. The increase in prices for shelter (0.8%) accounted for over 70.0% of the overall CPI increase. Prices, less food and energy, rose 0.5% in February after advancing 0.4% in January. In February, prices for food rose 0.4% (6.0% for the past 12 months); energy prices rose 0.6% (gasoline prices rose 1.0%); prices for apparel advanced 0.8%; and prices for transportation services rose 1.1%. Prices for new vehicles rose 0.2%, while prices for used cars and trucks fell 2.8%.
• Prices at the producer level declined 0.1% in February, following a 0.3% advance in January. For the 12 months ended in February, producer prices rose 4.6%. In February, prices for goods (-0.2%) and services (-0.1%) declined. A major factor in the decrease in prices for goods was a 2.2% decline in prices for foods, with prices for chicken eggs dropping 36.1%, accounting for over 80% of the decline in goods prices. Energy prices also slid lower, falling 0.2% last month. Producer prices, less foods and energy, advanced 0.3% in February. Leading the decline in prices for services was a 0.8% drop in margins for trade services (trade indexes measure changes in margins received by wholesalers and retailers). Prices for transportation and warehousing services fell 1.1%. In contrast, prices for services, less trade, transportation, and warehousing, advanced 0.3%.
• According to the latest release from the Census Bureau, retail and food services prices fell 0.4% last month after increasing 3.2% in January. Retail and food services prices are 5.4% higher compared to February 2022. Retail trade sales were down 0.1% from January 2023, but up 4.0% from a year ago. Prices for food services and drinking places were up 15.3% from February 2022, while prices for general merchandise stores were up 10.5% from last year.
• Prices for U.S. imports edged down 0.1% in February after declining 0.4% in January. Lower fuel prices (-4.9%) in February more than offset higher nonfuel prices (0.4%). Prices for imports decreased each month since June 2022 with the exception of a 0.1% advance in December 2022. Import prices declined 1.1% from February 2022 to February 2023, the first 12-month decrease since December 2020, and the largest 12-month drop since September 2020. Export prices increased 0.2% in February, following a 0.5% advance the previous month. Prior to January, export prices hadn't increased since June 2022. Nevertheless, export prices fell 0.8% over the past 12 months ended in February, the first 12-month decrease since the period ended November 2020. Driving the increase in export prices in February was a 1.0% increase in agricultural export prices. Export prices, excluding agricultural prices, ticked up 0.1% last month.
• Industrial production remained stagnant, unchanged in February from the previous month. Since September 2022, industrial production has risen only one month, advancing 0.3% in January. Manufacturing output edged up 0.1% but was 1.0% below its level in February 2022. Mining fell 0.6%, while utilities rose 0.5%. In February, total industrial production was 0.2% below its year-earlier level.
• The number of issued residential building permits jumped 13.8% in February, although they remain 17.9% under the February 2022 rate. Building permits issued for single-family construction rose 7.6% in February. The number of housing starts increased 9.8% in February, but trail the February 2022 pace by 18.4%. Single-family housing starts were 1.1% over the January total. Housing completions increased 12.2% above the January estimate and 12.8% over the February 2022 rate. Single-family housing completions in February were 1.0% above the previous month's pace.
• The national average retail price for regular gasoline was $3.456 per gallon on March 13, $0.067 per gallon more than the prior week's price, but $0.859 less than a year ago. Also, as of March 13, the East Coast price increased $0.073 to $3.315 per gallon; the Gulf Coast price increased $0.108 to $3.087 per gallon; the Midwest price rose $0.045 to $3.310 per gallon; the Rocky Mountain price decreased $0.012 to $3.730 per gallon; and the West Coast price increased $0.061 to $4.402 per gallon. Residential heating oil prices averaged $4.186 per gallon on March 13, $0.059 below the previous week's price, and $0.749 per gallon less than a year ago.
• For the week ended March 11, there were 192,000 new claims for unemployment insurance, a decrease of 20,000 from the previous week's level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 4 was 1.2%, unchanged from the previous week's rate. The advance number of those receiving unemployment insurance benefits during the week ended March 4 was 1,684,000, a decrease of 29,000 from the previous week's level, which was revised down by 5,000. States and territories with the highest insured unemployment rates for the week ended February 25 were Rhode Island (2.9%), New Jersey (2.7%), Massachusetts (2.5%), California (2.4%), Minnesota (2.4%), Montana (2.1%), New York (2.1%), Alaska (2.0%), Connecticut (2.0%), and Illinois (2.0%). The largest increases in initial claims for unemployment insurance for the week ended March 4 were in New York (+16,244), California (+9,918), Kentucky (+2,789), Oregon (+1,276), and Ohio (+1,209), while the largest decreases were in Rhode Island (-1,687), Massachusetts (-1,134), the District of Columbia (-937), Illinois (-753), and Florida (-428).

Eye on the Week Ahead

The latest data on the housing market is available this week. Sales of existing homes have fallen 12 consecutive months heading into February. It is unlikely that trend will change with the release of the current information from the National Association of Realtors®. New home sales, conversely, have fared much better.